Your internal efforts have failed to collect a severely past due account. Now, it’s time to call in another source. But who should you call, your corporate/general counsel, a collection attorney or a collection agency? Let’s look at all three and determine what your best course of action is.

USING YOUR CORPORATE/GENERAL COUNSEL

Corporate counsels are lawyers who work directly for a business and general counsel is a law firm that is on a retainer to work a certain amount of time each month for your company. As such, all their time and energy is spent on their employer’s requirements in various capacities and do not have a specific focus in collections. Their main job is to provide legal representation to their employer and their employees. Specifically, they will offer advice on legal matters and perform legal research for the benefit of the corporation. Additionally, they will offer opinions on issues like contracts, property interests, collective bargaining agreements, government regulations, employment law and patents. They may also represent their employers in court on defense matters and they are also utilized in forwarding litigatory matters to experts in pending litigation matters.

Now when it comes to handling a collection situation, yes, they can handle it, but will they do the best job for you? If you have a large volume of placements can they handle it? Corporate/general counsel typically have little (if any) collections experience and very little of their day-to-day time is focused in this area. Collection agencies and collection attorneys have specific training and experience in handling collections that a corporate/general counsel usually does not have.

Also, if you use your corporate/general counsel to file suit against a customer who operates in another state, normally they file the suit where your company is located as it is much easier to do. However, once you obtain a judgement, you will need to find an attorney in the local jurisdiction of your customer to domesticate and enforce it. Now you have two attorneys involved, a delayed resolution and increased expense.

Using your corporate/general counsel to collect a debt may be easier as they are either part of your company or are local and on a retainer and you might think your costs will be less but the retainer is only a charge against their hourly billing. A collection matter can cost a lot of money to pursue with no guarantee of success based on an hourly structure, especially if your customer files a counter claim, it could wind up costing you much more in the long run. So, will using your corporate/general counsel get the best results? We do not think so.

USING A COLLECTION ATTORNEY OR A COLLECTION AGENCY?

Based on the previous assessment the choice is now a collection attorney or a collection agency? There are hundreds of collection attorneys listed with the Commercial Law League of America and all of them have experience in collections and many do a great job. But, if your customer is delinquent and you cannot get paid, should your first stop be a collection attorney or a collection agency? This is a choice that companies frequently face as they try to find a collection professional to handle their placements who will provide the greatest chance of collection in the shortest period of time with the lowest costs. We think the decision is a straight forward one.

To further explain, let’s look at the differences and why one choice is rather clear: collection agencies work on a contingency basis. That is, they will keep a portion of what is collected. If nothing is collected there is zero fee. When they do collect, a contingent fee is charged on the amount collected. Often these fees can be negotiated based upon the volume of accounts placed, size of the account and circumstances such as age of invoices, disputes, etc. A collection agency’s goal is to collect to collect your money in-house in the shortest period of time, without having to use an attorney. When a collection agency has to forward a file to an attorney, it is their last resort in trying to get your money.

Collection attorneys, while many may work on a contingency basis, there are those that work on a fee for service basis. They will earn a fee based on the time spent regardless of the outcome. Additionally, attorneys earn their living by suing and filing a lawsuit costs money. Included in the suit costs will be the cost of filing a summons and complaint, serving the debtor, and various required attorney actions during the lawsuit. Collection attorney’s make more money litigating. Unnecessary lawsuits are filed frequently and as the collection effort is non-apparent during the time of litigation, many times your customer can go out of business, pay other suppliers instead or file a counter suit, which will further increase your exposure. Once a lawsuit has been filed you are now at the mercy of the courts and the time frame to get you paid just got extended 6-12 months.

Collection attorneys are also normally regionalized to geographic locations. They usually do not have the reach to handle accounts in multiple states let alone matters that are international. Furthermore, if your placements are spread though out the country or around the globe you have much more “clout” when dealing with a national or international collection agency as opposed to a local law firm.

One of the critical difference between collection agencies and attorneys is that collection agencies are equipped to handle a large number of accounts. They are specifically designed and have the personnel and computer capability to deal with thousands of accounts at any one time and handle files that range in dollar amounts from $100 to millions of dollars. Collection attorneys rarely have the capability to properly control a large volume of collections files and do not typically want to handle low dollar files. Agencies are designed with this capability, in mind. If they cannot successfully handle high volumes and low dollar files they will not be a very profitable business. Attorneys have assistants and associates handling incoming calls and payments while working on other more important business, themselves. They are law firms not collection agencies and therefore do not operate like a traditional collection agency

If litigation is needed using a collection agency is still your best bet as collection agencies usually have a network of local attorney’s that they utilize to bring suit, secure judgments and collect in a creditors behalf. They are staffed to “quarterback” attorney efforts to move the case as swiftly as possible. When questions arise, collection agency staff are versed in the various nuances of the litigatory process and are well prepared to get you the answers needed quickly and efficiently. Reputable agencies are fully bonded and insured and only utilize attorneys who are equally bonded and insured to provide creditors with maximum protection.

As collection agencies handle a large volume of accounts they also place substantial business with local law firms. Agencies have vetted the law firms they use who they feel do the best job in securing recovery for the creditor. Furthermore, an agency that is national in scope actually has more clout with a given law firm than any single creditor. Those attorneys that accept business from both collection agencies and credit grantors are bypassing the triadic system that has been in existence for over 100 years. It is unethical to accept business from a creditor as well as a collection agency. While you certainly want recovery of your funds we would believe that it should be accomplished in the most ethical manner possible.

CONCLUSION

Collection agencies FULL time responsibility is to collect the delinquent debt of their customers in the shortest period of time without litigation. Collection agencies are set-up and geared to making a maximum number of attempts at third party intervention to bring forth payment, quickly. When a customer asks that the agency call back next Tuesday at 10am, the agency has software to ensure that the call is made next Tuesday at 10am. This is what they do all day, every day. This is not how your corporate/general counsel or collection attorney is set up to operate and therefore they cannot deliver the results that a collection agency can. Also, if litigation is needed a collection agency will hire for you the best collection attorney in the jurisdiction of your customer, contain your costs and make sure the account is handled as efficiently as possible and bring you the results expected. A collection agency’s goal is to collect your money in the shortest period of time and that means doing It ethically and as expeditiously as possible.

Sam Fensterstock is Vice President of AG Adjustments, CMA’s chosen collections partner. For over 40 years, AGA has been the most respected commercial collection agency in the nation. The company assists corporations with improving cash flow, while preserving a positive image with customers. It accomplishes this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

“We have lien rights and we don’t need collection agency”. “We have credit insurance and we don’t need a collection agency”, “We factor our receivable, so we do not need a collection agency”. Are any of these statements 100% accurate? We hear these statements all the time and the answer is no.

Chasing debts can be a difficult and sometimes impossible job for any credit department regardless of your resources. As well as being time consuming, the problems associated with managing delinquent payment and writing off bad debt can be crippling to your company. At AGA, we believe in a proactive “all-in” approach using all the credit and collection management tool and services available to you that will help you avoid many of these complications.

Your perspective regarding how to manage the optimum credit department will shift and change depending on your company and industry. As with any career, your career in commercial credit is an evolution. I’d argue credit and collections is the ultimate onion profession, layered; Regardless of how long you’ve been in the credit profession the best of the best keep peeling back the onion learning more, trimming days.

For those in the construction trade it’s all about secured transactions and the lien and bond process. Are preliminary notices prepared timely and accurately, are deadlines being managed, liens filed correctly suits initiated on time? Some credit managers limit their focus to the collection efforts relating to the owner via his/her property as collateral or through a payment bond on a public job. We do not think you should limit yourself, think “all-in” with your credit tools. Obviously, you’ll need to maintain your rights efficiently in those construction situations where the dollars justify the expense, but what about putting pressure on your debtor? Think “all-in” and place the customer with a collection agency and pursue aggressive 3rd party collections in conjunction with the ladder of supply pressure. Even a personal guaranty, not typically used in construction credit, can assist your collection agency during their process.

The job is get the cash thru the door as quickly as possible. In the construction market, resolving your delinquencies from the bottom of the ladder of supply (debtor pressure from your 3rd party agency) in conjunction with pressure from the top of the ladder (serving your notice and filing your lien to engage the property owner and general contractor to force funds downward) can pay dividends. Save time and money, think “all-in” with the addition of 3rd party agency pressure being placed on your debtor simultaneously will typically help resolve your claim faster than simply serving and filing a notice or lien. In most cases, without the expense of filing suit against a payment bond or foreclosure, you won’t be giving up your rights to proceed should that need arise. Lastly, don’t assume your notices and liens are going to be 100% bullet proof, when it’s time to file a lien it’s time to place the account for collection. Of course, it’s important to work with an agency that understands construction credit.

Credit Insurance is another tool. It is commonly used to increase sales, increased borrowing availability, and help prevent catastrophic loss. The cost of credit insurance is based on the accounts that are subject to the insurance and their inherent risk. The cost for the policy will be a percent of your sales and depends on many variables, including trading history and historical debt loss of your company, your trade sector, and your customer portfolio.

Deductibles for credit insurance can also be an issue. The analysis of the solvency of your clients is followed by the setting up of limits carried out by the insurer. Credit insurance covers your company for loss of the credit insured, but rarely covers 100% of your accounts receivable, it’s usually up to a predetermined percentage. Depending on the risk category, the insured’s deductible can vary between 5% and 20%. The deductible is the amount that the insured must pay toward his own losses before he can recover from the insurer. Like any insurance submitting a claim can affect your premium therefore your “all-in” approach should include 3rd party collection efforts prior to submitting a claim to your carrier thereby reducing your need to submit the claim, paying the deductible and most importantly getting you paid faster.

Factoring is another tool that is used in many industries where extended terms are granted like apparel and furniture. However just because you have factored your receivables doesn’t mean that your fully protected. The most common type is Recourse Factoring where if your customer does not pay the factor on the factored invoices, you must repay the factor and collect your delinquent customer on your own. The other type is Non-Recourse Factoring where if your customer does not pay due to bankruptcy or insolvency you do not need to re-pay the factor. Given that Recourse Factoring is the most common, just because you have it doesn’t mean that you will never need to engage with a collection agency and sometimes you may have to go “all-in” and leverage every resource you can to help you collect what you are owed.

Conclusion

Waiting until customer’s invoices are past due is still a typical approach many credit & collection departments take to manage their accounts receivable, but this just creates problems and leads to a greater probability of incurring bad debt. Mitigating credit risk from the start, with an “all-in” strategy will enable you to better manage your accounts and prevent cash flow problems in the future.

Today, many organizations both large and small are taking a closer look at their credit & collection management process. Many have taken this analysis a step further by addressing all aspects of their credit process performance including efficiency, cycle times, available outside credit tools and their connection to performance. Understanding all the tools of your trade; To include credit applications, personal guarantees, credit reporting/monitoring, security and the utilization of a professional, methodical collection agency is the starting point then determining the combination that’s right for your business will have your department consistently in the best possible position to get paid, that’s “all-in”.

Sam Fensterstock is Vice President of AG Adjustments, CMA’s chosen collections partner. For over 40 years, AGA has been the most respected commercial collection agency in the nation. The company assists corporations with improving cash flow, while preserving a positive image with customers. It accomplishes this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

We usually associate credit fraud with the impact it has on individuals in the form of identity theft or phishing scams and the personal financial problems it causes, but what about businesses? What is the incidence of B2B credit fraud and is it a major problem?

Yes, it is a major problem. According to credit reporting agency, Experian, B2B fraud costs US businesses “more than $50 billion annually” and most analysts believe that that number is too conservative. It is also assumed that the incidence of fraud will continue to increase as the use of various electronic payment methods continues to grow.

HOW EXTENSIVE IS THE PROBLEM?

For an overview of the problem let’s take a look at some results from the Association of Financial Professionals (AFP) “Payments Fraud and Control Survey”, published in March 2015:

Some highlights from this survey are:

62% of companies were subject to payments fraud in 2014.

The most-often targeted payment method by those committing fraud attacks are checks. Check fraud also accounts for the largest dollar amount of financial loss due to fraud.

The second most frequent targets of payments fraud are credit/debit cards.

92% of survey respondents firmly believe EMV- enabled credit/debit cards will be effective in reducing point-of-sale (POS) fraud. EMV- Europay, MasterCard and Visa — is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.

61% of survey respondents believe that Chip-and-PIN validation will be most effective in preventing credit/debit card fraud.

Business fraud can devastate a company and as there are very few external protections it is up to the business to protect itself. A company must be aware of the various types of fraud that it may be subjected to and develop methods for protecting itself.

WHAT ARE SOME OF THE DIFFERENT TYPES OF B2B FRAUD?

There are many different B2B fraud schemes. Here are a few of them:

Account Takeover: This is similar to the phishing and telephone scams that affect personal identities. Here credit card or account information is intercepted and later used to place orders or otherwise defraud a legitimate business. This particular type of fraud accounts for a large percentage of B2B fraud occurrences.

Business Identity Theft: Here a scammer opens business accounts under the name of a legitimate business. The applicant acts as the business owner (or a representative) and utilizes their contact information to apply for credit or open accounts.

Commercial Bust-out: The culprit opens several lines of credit with the intention of eventually abandoning them once the credit limits have been reached. This requires that a good credit history be fabricated so that limits can be increased and maxed out right before the perpetrator disappears. This type of fraud results in millions of dollars of losses every year.

Never Payment: Here a business or individual opens a new account, by materially misrepresenting itself. They will obtain the maximum credit possible, but never make a payment.

Shell Companies: These are companies that are set up solely for the purpose of committing fraud. The entity will not sell a product or provide a service. Many times they are used to launder money. They rarely have a physical location, and if they do, it may be a storefront or offshore.

Bleed-outs: This method of committing fraud is similar to a bust-out. However, it is committed from within by insiders. Employees commit this type of fraud over a long period of time. They bleed out assets, leaving the company unable to pay its bills.

SOME CHARACTERISTICS THAT MAY INDICATE A POTENTIAL PROBLEM

Individuals and groups committing these types of frauds will often display many of the same characteristics. The following are some of the things you should look for:

Companies Without Long Histories: Typically, companies with longer track records are safer to do business with because they will have more credit history and references to check. The shorter the life of the company, the less you will have to work with.

Suspicious Changes in Ownership: A well-established company, with good credit, is taken over by a new group that tries to hide the change in ownership. This may signal a potential problem. It may be an indicator that members of the new owners are committing fraud.

Questionable Financial Statements: Mistakes or suspicious items on a company’s financial statements may be a harmless accounting error or signal a real problem. A detailed financial analysis is necessary before doing business with this company.

Fraudulent Credit References: False credit references on a credit application are a warning sign to forget about doing business with this applicant. Unless the applicant can prove it’s a clerical error and has other good references, doing business with this entity is an invitation to be scammed.

No Receivables: If a company’s financial statements do not list any receivables, assuming they are not a cash only business, they are probably a phony shell company that is not providing any goods or services to customers. Do not extend this company a line of credit.

HOW DO YOU PROTECT YOUR BUSINESS FROM B2B FRAUD?

Validate All Information

The easiest and most important step in B2B fraud prevention is to verify the information provided by companies that want to do business with you.

This means you need a credit application (see our blog on credit applications). All the information provided needs to be thoroughly reviewed and verified. Make sure everything on the application is accurate, and ask questions if it is not. Any material errors are a reason not to do business.

Additionally, if your business is contacted by a bank, credit card company, or government agency, don’t provide any sensitive information before verifying the legitimacy of their request.

Utilize External Credit Sources

A business can pull a credit report on another business to ensure that they are dealing with a credit worthy company. Unlike personal credit, which is protected by the Fair Credit Reporting Act (FCRA), anyone can pull a business’s credit report at any time without permission.

Utilize Fraud Detection Tools

Utilizing a fraud detection tool like Experian’s National Fraud Database allows you to compare credit applications and other information to current fraud records stored in a national database. If the applicant is in this database you want to be very careful about doing business with them. COD may be your only option.

Ongoing Transaction Review

Review your banking and credit accounts on a regular basis. Not doing so can leave you and your business a victim of fraud. Initially, transactions tied to fraud or illegitimate charges may not be large enough to indicate a problem, but by monitoring your accounts on a regular basis, you’ll be able to spot fraudulent transactions before real damage has been done.

Staff Education

Make sure you educate your employees on the various types of fraud and how to prevent it. You will sleep a lot better knowing your staff has the ability to protect your business against scammers and con artists.

CONCLUSION

B2B credit fraud is becoming more and more of a problem. Important business, financial and personal data are increasingly being compromised. Preventing and defending against B2B credit fraud is a challenge for companies. But you can limit your exposure and minimize losses due to such activity. Being aware of the problem is an outright necessity and implementing the protective measures described above will help reduce most of the risk of B2B credit fraud.

For over 40 years, AGA has been the most respected commercial collection agency in the nation. We assist corporations with improving cash flow, while preserving a positive image with customers. We accomplish this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

As a commercial collection agency, the primary way AG Adjustments (AGA) helps our clients is through the collection of their seriously delinquent debt. One of the ways that our clients can aid in our collection efforts is by having their customers fill out a credit application that provides measures of protection and will increase the ultimate collectability of an account. We cannot emphasize enough how many times we have been successful in the recovery of our client past due monies because of their proactive approach in obtaining a well-drawn up credit application.

As a company working in the B2B space, the credit application is one of the primary tools available for controlling credit risk when extending credit to your customers and protecting your company. A credit application is a contract between the seller and the buyer. A good credit application will benefit the seller, a bad one the buyer. Therefore, it is important that your company be certain that your credit application, whether electronic or in paper form, contains all the safeguards and guarantees available to reduce customer risk. Securing a credit application, while certainly does not guarantee payment, is one of the more significant documents you can obtain in assisting in not only the credit decision but the ultimate collectability of your past due accounts receivable and collection fees. The adage that “the sale is not complete until the money is in the bank’ is as true today as ever. A good credit application will assist in getting your company to that point.

What Do You Need to Know to Control Credit Risk?

The credit application is your first step in gathering information about your potential customer. The more you know about them, the better off you are and the easier it will be to make a good decision and collect the necessary information to determine how much credit to extend them. You can never assume all the information on the application is correct and you will need to do your due diligence to help you verify the information provided you before you grant credit. Therefore, it is important that the sales department make sure that every customer fills out and signs the credit application prior to any goods or services being delivered.

A typical credit application requires that at least the following information be provided:

Name and address of the applicant

Name and address of any parent company

All contact information: I e: phone #’s, e-mail addresses etc.

Type of entity (i.e., corporation, partnership, proprietorship, etc.)

Names of principals/directors/officers

Bank references

Trade references -at least three

Tax ID and DUNS number

Availability of financial statements

Credit limit requested

Applicant’s agreement to payment terms

Applicant’s agreement to interest on past-due amounts

Applicant’s agreement to pay for legal and collection costs

Applicant’s personal guaranty(s) with spouses if possible and authorization to pull personal credit report with SS#.

A credit application serves two purposes: It is a data gathering tool and it is a contract. As a contract, it specifies the rights and obligations of both the customer and creditor. As you are writing the application, bear in mind that it’s a request for credit to be extended and should be written so that it provides your company an advantage if your business relationship fails, since we all know that “credit is not a right but a privilege.” The most important things to consider are:

The signer(s) must be able to legally bind the company. If the signer is not authorized to accept the terms and conditions of the credit application, they can’t sign the application.

If possible, make a personal guarantee part of your credit application. We would recommend that when extending credit to SMB’s that you get the owners and their spouses to sign a personal guarantee. While many personal guarantees have no value, it’s better to have one than to not and if a SMB owner is not willing to sign a personal guarantee, that might tell you something as well. You also want the social security number of the individual signing the personal guarantee so that if you must enforce it, you will have an easier time tracking them down in the event they abscond.

You want a stipulation that the customer will pay interest on past-due amounts and will pay any collection, legal fees and court costs that are incurred because of non-payment. If you do not have this detailed in your credit application, you will NOT be able to collect fees on your debt if placed with a collection agency. In the event of litigation, it is up to the local courts jurisdiction if collection fees, attorney fees and interest will be awarded

You want assurance that only the disputed portion of a past due amount will be withheld.

If you file suit over non-payment, you want it to be as convenient as possible. The choice of venue must be yours. While many creditors will request suit in their local jurisdiction, this is not necessarily in a creditors best interest. The customer’s assets are normally local to their whereabouts. Therefore, in the event post judgment remedies are needed the judgment must be recorded in a debtor’s local jurisdiction to attach assets.

You want authorization to obtain information from credit bureaus, banks and trade references both before authorizing credit and ongoing once they are a customer.

You want current financials and the ability to obtain financials in the future once they are a customer.

Verifying the Credit Application

Once you have the credit application in hand, you need to verify the information it contains. At least three trade creditor references should be contacted as well as their banks to verify the existence of their checking account. You should be sure that all their references are legitimate. If for some reason you can’t contact one, be sure at least that they exist. Any false information on the credit application is a valid reason for not doing business. If the buyer is looking for a substantial credit line, make sure you review their financials, especially a statement of cash flow. If they are operating in a negative cash position you need to be sure that they will have enough cash available to pay you. Limit their credit line or at the very least change their terms if it looks that they may have a cash flow problem.

Once They Are a Customer

Periodic credit reviews are a necessity. Major account defaults can come from existing long-term customers as well as the new ones. Customer credit limits should be reviewed periodically, at a minimum once a year. Get current financials from your accounts annually if possible. Make sure their cash position can support their business. CMA offers many solutions to help you check credit, from bureau reports to credit group meetings, trade references and more. Additionally, obtaining current credit bureau reports on your largest customers, annually, is a good idea. Stay on top of your accounts receivable aging. If a customer is always 60 to 90 days past-due on some part of their balance, they are only one period away from being a problem.

by Sam Fensterstock, AGA
“Cash is King,” and if you are not maximizing your cash flow, it can have serious repercussions on your operations and bottom line. Most companies, in particular SMBs, wait too long to aggressively go after their slow-paying accounts. It costs four times as much to bring on a new customer as it does to keep an existing one, so no one wants to lose a customer over collection tactics. However, once a customer on credit goes 90 to 120 days past due and is no longer ordering and paying down the old balance, it is going to become more and more difficult to collect these accounts with only internal resources. The effect of your customers owing your company money for too long can be significant.

HOW IMPORTANT IS CASH FLOW?

The difference between the beginning cash position and the ending cash position of a given period is called cash flow. If you take in more than you spend you have a positive cash flow, the reverse is a negative cash flow. Cash flow is one of the major indicators financial institutions use to evaluate financial health. Banks and financial institutions are not going to loan you money if they don’t think you can pay it back. Remember, when you borrow money for any purpose, you are going to pay it back with future cash flow. You can’t pay it back if you have a negative cash flow.

HOW CAN YOU DETERMINE IF YOUR CASH FLOW CAN BE IMPROVED?

Collecting your accounts receivable as quickly as possible is a major factor in having enough money to cover current operating needs and pay off your debt commitments. There are several credit and collection performance measures that can tell you whether you are collecting your accounts efficiently, or if you need some outside help to improve your cash flow. We will discuss two of the most popular ones:

Days Sales Outstanding (DSO)

DSO is a measure of the average time in days that receivables are outstanding. It can be used to compare your company to other organizations for identifying whether your company is converting receivables to cash efficiently. In most instances a DSO under 40 days is good assuming you are giving 30 day terms. A DSO from 34 to 38 indicates very good operating performance and a DSO over 45 indicates that you are not converting your receivables efficiently and that some outside help may be necessary. The formula for computing DSO is:

(Ending Total Receivables x Number of Days in Period)/(Credit Sales for Period Analyzed)

A sample calculation is:
Ending Receivables = 1,000,000
Credit Sales for Period = 750,000
Number of Days in Period = 31

DSO =(1,000,000 x 31)/(750,000) = 41.3 days

Collection Effectiveness Index (CEI)

This measure was developed by the Credit Research Foundation (CRF) and is thought to be a far better measure of collection effectiveness than DSO. It produces a percentage that measures the effectiveness of collection efforts over time. The maximum value is 100% and the closer you are to 100% the more effective you are. A CEI under 75% needs to be improved or your cash flow will eventually be negatively affected. The formula for computing CEI is:

Notice the difference in the results of the two calculations. The DSO is acceptable, but the CEI is not.
Realistically, whichever measure you use, it should be computed frequently (monthly if possible) and reviewed over time. If it’s trending downward, even if it is not yet unacceptable, you should consider bringing in outside help to stop the downward trend before your cash flow is seriously affected.

WHY USE A THIRD-PARTY COLLECTION AGENCY?

Any receivable not collected represents a loss and affects your bottom line. You have laid out money for goods produced or services rendered and not collected the money due your company. Your cost of sales has gone up, but your revenues haven’t. That’s a net loss and your bottom line has been reduced accordingly. For example, suppose your profit margin is 10%. In other words, on a $5,000 sale you make $500, or your cost of sales is $4,500. If you have to write off $50,000 of receivables in a year, you need an additional $450,000 in sales to make up for it. Sometimes not such an easy task.

There are at least three good reasons to use a collection agency to help collect past due accounts:

A collection agency will collect from accounts that you could not. Your past due accounts won’t talk to you but they will talk to an agency or the collection agency’s attorney. The agency knows that to collect they must make contact with the account and they won’t stop trying until they do. A good collection agency will make 10-15 attempts to reach your former customer in the first 30-45 days they have the file, typically about three times the number of attempts your internal staff will make. As their fee is based on what they collect and agency will be more persistent and assertive than your internal collectors are at this stage of the customer lifecycle. Just remember this, collection agencies don’t get paid unless they collect your money and collection agencies do not want to work for free.

Using an agency frees up the time and resources needed to manage your current active business. Collecting money is very time consuming. You need to send letters, emails, possibly make customer visits and make phone calls, lots of phone calls. This takes time away from the things you and your employees need to do to manage and run your business on a day to day basis.

A collection agency utilizes technology that you do not have. This makes them far more proficient at collecting money than their clients. They possess advanced tools that help them find and make contact with debtors. This technology is costly and unless you are in the collection business you won’t have it. Additionally, their personnel are professional debt collectors. That is what they do and they do it well.

CONCLUSION

According to Commercial Law League of America, the amount of money you are likely to collect from a past due account is directly correlated to the age of the account. Once the account is 90 days past due you will most likely collect only about 70% of the amount due, and after 6 months only about 50%, and the amount likely to be collected continues to go down rapidly from there.

If your customer has not paid you and they are more than 90 days past due, there are no new orders coming in the door and they are not responding to your request for payment you are probably not going to get paid on your own. For these types of accounts, it makes business sense to place them with a 3rd party collection agency now and at least get 30-40% of your money back. This will allow you to maximize your cash flow and minimize the negative effect on your bottom line.About AGA

For over 40 years, AGA has been the most respected commercial collection agency in the nation. We assist corporations with improving cash flow, while preserving a positive image with customers. We accomplish this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

This is a common-sense approach to the problem of determining whether a customer is about to become a collection problem. Companies that have a cash flow problem must choose which vendors they will continue to satisfy and which vendors they will not. If a company has insufficient cash on hand to pay all of their vendors on a timely basis, some of their vendors are not going to get paid on time. This can be a one-time problem and things could get back to normal fairly soon, or it can be an endemic problem and if you don’t act promptly it may cost you.

When you first spot a problem, you are not going to know whether it’s a short-term thing or the customer is in financial difficulty. It behooves you to make a determination and act as quickly as possible. Some of the signs to look for are discussed below. Essentially, they represent behavioral changes in the account. The chances are that if the account is having financial problems more than one of them will be evident, but the occurrence of only one may still signify a real problem. In any event, once you make your determination, the quicker you turn the account over for collection, the more likely you are to realize a significant cash return. Here are the things to look for:

The Account is Over 90 Days Past Due

The customer has been a solid citizen and almost always paid on a timely basis. Now they are 90 days past due, and it seems they are struggling to not go to 120. They answer your calls, but promises to accelerate their payments and clean up the past due balance are not met. They may also be evidencing some of the behavior discussed below. The chances are you have a problem and turning them over for collection may save you some money and in many instances, save you a customer.

The Account is Not Returning Your Calls

This is a sure sign of a problem. They are past due and ducking you. If they won’t talk to you after repeated attempts to reach them, your collection agency may be your only solution. Collection agencies have trained recovery professionals that focus on working with these types of accounts and experience this problem as a normal course of their daily activity. They will get your customer to the table because it’s what they do for a living.

The Account Has Started Purchasing Erratically

Over time, the customer has always bought, even if it’s seasonal, a reasonably predictable amount of product. Your salesperson on the account can’t understand what’s going on. There are several possible reasons for erratic purchasing. It is possible that the demand for your product(s) has become highly variable and the customer is purchasing accordingly, or your customer is having financial trouble and is having difficulty staying current. If other customers are still purchasing the same products on a consistent basis than the chance that there is a demand problem is small. So, a financial problem may be the reason. This is something that needs to be checked out before it costs you money.

The Account Has Stopped Buying

If the account has stopped buying and owes you money, even if it’s not past due, you need to be on the alert. For whatever reason, if the account no longer needs you, they don’t have a reason to be prompt. If they go 90 days past due, you are probably going to need outside help to collect your money.

The Account Changes Bank Accounts Too Frequently

Good banking relations are vital to a company’s health. If your account is suddenly paying you from a different bank it may not signify a problem, but if they pay you from a different bank every time they send you a check, something’s wrong. This needs to be checked out. An updated credit check is called for, and if it doesn’t come out clean, you need to pay extra attention to the account because, if they are not overdue yet, the chances are great that they soon may be.

You Receive Negative Trade Information on an Account

As of now, the account is not past due, but you receive some negative trade information on the account at a recent credit group meeting or from a credit report. This needs to be checked carefully. When an account gets into trouble, they start allocating their available cash. The more important vendors may not see a problem, but the secondary vendors find the account is falling behind. For example, if the account is a supermarket, to be in the soda business they need Coke and Pepsi. The alternative soda brands will see a problem, but Coke and Pepsi will not until the company is ready to go belly-up.

The Account Has Several Unresolved Disputes

There are always disputes with customers. They received the wrong items, or the items were received damaged, or they were entitled to a discount are some of the reasons an account will not pay an invoice in-full. However, these types of disputes are easily settled if both parties are willing to compromise. But when an account refuses to settle and the dispute grows old, and additionally more invoices are disputed and they too age, you have a problem and it has nothing to do with the disputes. The account is holding on to cash and the disputes are a way of justifying their non-payment.Final Thoughts

We recommend having a strategy in place to determine when to pull the trigger and place a customer with your collection partner. The warning signs listed above are usually evident during your internal collection efforts and the sooner you recognize them the better. We recommend being proactive with your internal efforts as soon as your customer is past due. If the customer is more than 90 days past due, you obviously have a problem and the account should be turned over for collection to maximize your cash flow.

But even if your customer is not 90 days past due, you may be about to have a problem. When an account evidences any of the behavior discussed above you need to get on their case sooner rather than later. Prompt action will save you money. If the account is behaving erratically you should turn them over as soon as they trigger the 90 days past due signal because in all probability things are not going to get better, only worse.Sam Fensterstock is Senior Vice President, Business Development, for AGA, a leading commercial collection agency based in Melville, NY. He can be reached at (631) 425-8800 or samf@agaltd.com.

Let’s say that you have placed your former customer for collection and your agency demands, as well as the local attorney, demands have not been successful. Your agency along with your attorney believe that litigation is your only option in hopes of being paid, provided that the amount due falls above your suit parameters. Had the former customer filed for bankruptcy, you can forget about a lawsuit and write off the receivable. In this situation, if you want to have any chance of collecting, your agency along with your attorney will review all documentation supplied along with a review of their internal efforts and investigation and make a recommendation to you regarding the filing of a lawsuit in the debtor’s locale.

SOME THINGS TO CONSIDER BEFORE FILING

Upon agreeing to litigate, your agency will then provide your attorney all of the information they have on your claim including amount due, principal and interest; debtor’s contact and phone number; nature of your business; details of any dispute and creditor’s response with copies of memos and correspondence. Additionally, they will provide the attorney with any documentation they have including: credit agreement; contracts, leases, personal guarantees, promissory notes, and NSF checks; purchase orders, delivery receipts, invoices, and statements of account; etc. The attorney will use this information during the legal demand process to try to bring the debtor to the table as well as use to substantiate their pleadings if suit is filed.

If the attorney has exhausted all their demands with no positive result, the next step is to consider a lawsuit. Before bringing a lawsuit, you want to be very sure that you have a good chance of winning. It is going to cost you some upfront money to file a lawsuit, and it would be silly to spend it if the debtor is out of business and you have no personal guarantee or if it is a highly contested debt and debtor has a good chance of successfully defending it. If you are going to file a lawsuit, you need to determine whether any of the following debtor defenses are possible:

• Could the debtor claim a prior payment?
• Is the amount due an offset?
• Does the debtor have a basis for a counterclaim?
• Is the debtor disputing the balance and has documentation to back it up?
• Is payment barred by the statute of limitations?
• Were the goods and/or services provided deemed inferior by the debtor?

If any of these defenses, and there are more, is possible then you may want to think twice before filing a lawsuit, because if you have to go to court the suit may become expensive, and there is a chance you might lose, thereby increasing your cost with no reward. Also remember, having a personal guarantee always helps. Furthermore, if a defense is expected, can you supply a witness at trial? Keep in mind the expense of travel as well as time your witness may need to be deposed or attend and testify at trial.

Many times a lawsuit will bring your debtor to the table to negotiate a payout or settlement. Also, keep in mind that at any time during the process, the debtor can file bankruptcy, which will immediately halt any legal proceedings or they can simply go out of business.

COURT COSTS AND FEES

Your agency will provide you with the attorney’s contingent fee requirement as well as any non-contingent fee requirement.

Court Costs

Filing a lawsuit costs money. Included in the suit costs will be:

• The cost of filing a summons and complaint

• The cost of serving the debtor

• Costs for various required attorney actions during the course of the lawsuit.

The attorney will require, in advance, their estimated costs for filing a suit and obtaining a judgment. The amount required will vary based upon jurisdiction and the venue where the lawsuit is filed. In addition, these fees are not negotiable as these costs are set by the courts.

These costs, however, most times are non-contingent and may not be lost. If you win, the court costs in connection with the lawsuit may be recovered from the debtor and you are entitled to a full return of the costs advanced if the debtor is required to pay costs as part of the judgment. .

Attorney Suit Fees

Essentially, these fall into two classes –contingent and non-contingent. Contingent suite fees, i.e., a fee based on the amount of the account as well as the amount collected. In addition to the contingency fees already applied to any monies collected, suit fees may also be charged. In essence, the suit fee is an additional fee the attorney earns for filing suit, no matter if you are successful in collecting.

The attorney may require a non-contingent fee to handle the case. This is a portion of the fee which attorney will earn upon the filing of suit. The non-contingent suit fees be applied towards the total suit fee the attorney earns which normally does not exceed a total of 10%.

HOW LONG WILL THE AVERAGE CASE TAKE?

If everything goes the attorney’s way and you get a default or no acceptable defense judgment, you can figure on six to nine months. However, every case is different and if the debtor puts up a fight it could take several years before a resolution is reached. The “wheels of justice move slowly” and creditors right litigation is no different.

COLLECTING A JUDGMENT

You have won your case and received a judgement from the court against your former customer, now all you have to do is collect the money due. If the debtor is located in the jurisdiction that the suit was filed then garnishments, marshal/sheriff levies, i.e., direct action against the debtor is possible. However, collecting a judgement can be a complicated matter. The lawsuit should always be filed in the jurisdiction where the debtors and their assets are located. Using a national agency that has the experience as well as database of local attorneys who specialize in collection litigation is a plus. A national collection agency has highly trained staff members who are familiar with the various laws of each state and their expertise affords them the opportunity to “quarterback” your attorney. Their goal is the same as yours, to conclude the matter as quickly and professionally as possible and maximize the money that is recovered. Some of the benefits of using your agency to handle your lawsuits:

• The agency can employ local attorneys who are bonded and insured to move the case as quickly and expeditiously as the local courts will allow.

• The agency can act as an effective conduit between you and the local attorney, thereby collecting the maximum amount in the shortest possible time while protecting your interests.

• The agency has more expertise, in collecting debtor judgments, in terms of volume of accounts and trained and available staff than any law firm. It is their business and their only business.

CONCLUSION

In the event that an account that you submit to your collection agency winds up with an attorney for litigation, before filing a lawsuit, carefully evaluate your chances of winning before you throw good money after bad. However, many times a lawsuit is your best and only chance of collecting.Sam Fensterstock is Senior Vice President, Business Development, for AGA, a leading commercial collection agency based in Melville, NY. He can be reached at (631) 425-8800 or samf@agaltd.com.

At some point you were responsible for selecting a new outside collection agency (OCA) and started providing them with past due accounts for collection. Now, one of the executives in your company’s financial department wants to know how the OCA is doing. He wants you to justify your selection. What factors are you going to consider that will allow you to determine whether the OCA’s overall performance is meeting your expectations or they are falling short?

There Are Two Types of Factors to Consider – Objective and Subjective

In evaluating an OCA’s operation there are many factors that have to be considered. First you have to determine the period of time that you want to evaluate. Most OCA’s would recommend that you us e a minimum of 12 months of placements with the review being done 90 days after the last file is placed. Some can be measured directly, like recovery rate and collection fees. Some cannot, like quality of the paper place due to factors such as age of debt and if it is disputed or not. Other factors like OCA personnel interaction with both you and your accounts. All are vitally important with respect to the OCA’s response to your needs and their results. So, let’s take a look at both types of factors that we need information on, under the assumption that once the information is gathered and evaluated, you will be able to justify about how well the OCA is performing and how your decision to use them has benefited your company.

Objective Factors

The prime objective factor that can be easily measured in the collection industry is the recovery percentage. How much you have turned over vs how much the OCA have collected. How is the OCA doing in collecting the accounts you have given them? What can they tell you about how they are doing it? You want complete transparency. Does your OCA have a web based platform that is available 24/7 that can provide you with detailed information? Can you easily obtain overall gross and net recovery rates? Can you view down to the individual account level all the way up to summary information on your total portfolio, over any period of time you require?

Additionally, is the platform easy to access and navigate for you to get this objective information? The web platform should be easy to use and provide you with all if the information you need to evaluate and track your OCA’s performance. You should also be able to query your data by account, by date, or range of dates, etc. Can you review all collector notes and communications? Do you have the ability to communicate with the collector if you have questions on an account? Can you export the data into any format you want such as Excel or PDF so that you can perform further analysis or use the data for in-house reporting?

What do you need to know?
• What is the quality of the paper that you have been sending to your OCA, how old is the debt and is the customer still open and operating? It’s almost impossible for an OCA to collect from a company that is out of business or in bankruptcy so strong consideration needs to be placed on the accounts being sent to your OCA and are they remotely collectable.

• For the accounts that are collectable, for the total time you have been doing business with the OCA, and by year and by month, and by account, what is their gross and net recovery returns (net is after adjustment for bankruptcies, uncollectable accounts, etc.)? This is an important number as it allows you to compare their results to published national averages as well as industry averages.

• Where does your OCA stand with your accounts today? You need a status report that lets you know how they are doing right now. What does your current portfolio look like, how much has been collected so far, in total, and by account. To the extent status codes and descriptors are used, what is the status of each account and what future activity anticipated.

• You need a payment history that shows the time to recovery from turnover to your receiving a check. Can you compute average recovery time so that you can do some cash forecasting based on the age of your portfolio?

• For auditing purposes, you need a track record of remittances sent to remittances received. You need to be able to verify that all payments the OCA has sent you have been received and deposited.

• All of the information should be exportable and sortable in to multiple formats. Can you sort a report by field from high to low, from low to high, or alphabetically, or by range of dates or by status code or by a combination of fields?

• You might also want your OCAs to provide any of their reports based on a specific subset of your accounts, such as by period of time the OCA has had the claim, by customer type, or by age past due at the time of placement. Any breakdown for a subset of accounts should be possible as long as you can extract accounts from the portfolio by some defined characteristic and then prepare a specific report just from the extracted accounts. Do they have ad-hoc query capability?

• Can you drill down to the individual account level and see in detail, how any individual account is being handled? Are the collector’s notes available and easy to understand? Can you use the account level report to easily access the collector either by email or by phone?

• Can you listen to recording of collectors calls on your files?

This is just some of the objective information you need to properly evaluate an OCA. If they can’t give you most of it, you might want to look for somebody that can.

Subjective Factors

These are qualitative items that can’t be measured with a number, but are just as important as the objective factors in evaluating an OCA’s performance. These are feel good items that measure your comfort level with the OCA, and if you are not comfortable with the objective factors regardless of how good they are, he OCA may not be sufficient for you to want to continue to do business with them.

What Subjective Factors Are Important?

• How they treat your accounts is critical. How does the OCA represent your brand? If they are too aggressive they may be making it impossible for you ever to do business with a customer again. Every once in a while an account may suffer a business downturn, so you don’t want to let an infrequent problem eliminate your chance of ever doing business with the customer again. And you certainly do not want to hear from the account’s lawyer that your OCA may be in violation of fair collection practices.

• Is this a professional outfit? If you do not feel you are being treated with respect, you may have a problem. The OCA needs to respond promptly to your emails or telephone calls. If you need some particular service, do they provide it without a hassle?

• Is the OCA easy to do business with? Are they flexible and do they have the ability to meet your needs, no matter those needs are? Working with and OCA many times is the last thing on your mind, but as you need them to manage a portion of your AR are they easy to work with?

• Do you like doing business with them? Do you like the people at the OCA? After all, collections is a “people business” and personal relationships are very important as they allow for far better communication and it’s easier to work with somebody you like than somebody you don’t. The chances of an OCA meeting your needs are far better if the parties get along than if they do not.

• Can they provide you with professional advice that can improve your in-house operations? An OCA should be able to give you an independent evaluation of your internal operations. While making you more efficient may cost them some short-term cash flow, it should guarantee your relationship for the long-term.

• Can you utilize advice from your OCA and their alliances to assist in your daily routines? Can you maximize your relationship and obtain information provided to protect your company from unexpected loses?

In Summary

As you can see, the review of your OCA’s performance is both objective and subjective. If you place business with your partners, both areas really need to be evaluated and should be on a consistent basis. While write-offs at most companies are insignificant, although expected, every dollar your OCA returns to you puts cash back to the bottom line. This further promotes the fact that the credit department can be more of a profit center, not just a cost center.

Sam Fensterstock is Senior Vice President, Business Development, for AGA, a leading commercial collection agency based in Melville, NY. He can be reached at (631) 425-8800 or samf@agaltd.com.

As a 25-year veteran of the Credit and Collections industry and now with a primary focus in third-party collections, one of the most frequent discussions I have recently had with both collection industry peers, clients and prospects is what is the appropriate third-party collection placement strategy for a B2B company? What constitutes serious delinquency? How long after invoices go past due has the customer reached the “point of no return” and should be placed with an outside agency? What is the optimal placement policy that ensures the highest possible recoveries?

In a typical credit and collection department, accounts are considered actionably delinquent somewhere between being 30 to 60 days past the due date. In the real world, if an account is a few days late, often your collectors are not going to hassle the customer too much for fear of upsetting your relationship with them. If you have implemented risk-based collections and are using an order-to-cash workflow solution you probably have strategies designed to auto-treat many of these customers.

However, at 30 days past due your collection strategy probably directs your collectors to call the customer and try to collect the receivable. But, most companies will not start really squeezing their accounts, until they are 45-60 days past due. At that time, depending on the organization of the credit and collection department and their resources, delinquent customers are likely to be turned over to the internal collection team who will begin to initiate recovery procedures.

Now let’s look at this from the viewpoint of a typical internal collector who is responsible for managing an account portfolio, all of which are in various stages of delinquency. The collector’s goal is to collect as much as they can and our experience says that accounts that are most current are the ones most likely to pay and will get the primary focus. As noted above, the older an account gets the lower the probability they are going to pay and as accounts age one of two things is going to happen, either they will eventually pay or they won’t. Accounts that don’t pay, as they age, will continue to become harder to collect and given your current collection environment will these severely delinquent customers continue to get the collection focus they need?

If you look at the percentage of a delinquent portfolio recovered by your collectors as a function of days past due, you will most likely see an extremely skewed distribution. When a delinquent customer is initially turned over to the internal collections team, the recoveries during the period until the accounts are 120 days past due will be material. Perhaps 50% of the initial value will be recovered. But, after 120 days almost nothing additional is likely to be collected. And the main reason for this is that given most companies collection resources, collectors are not actively working the older accounts, but focusing instead, on the more current accounts that are the easiest to collect. This practice means that the un-collected delinquent accounts will continue to age and a drag on your balance sheet.

Given this scenario happens so often, why do so many companies wait until an account is 180 days past due or even older before turning it over to a collection agency? It just doesn’t make any sense.

Take in mind that accounts turned over to a collection agency have first been handled by a company’s collection department usually for at least 90 to 120 days – unsuccessfully. But a good collection agency will eventually recover 30%-50% of those receivable. Why? Because an agency is an expert in handling these types of accounts and they don’t cherry pick based on age or dollar amount, they work them all. That’s why you can expect the types of recovery % mentioned above even on accounts that have been turned over even at 210 days past due. However, if the accounts are turned over sooner say at 90 to 120 days past due, the collection rate may go even higher. It a proven industry fact, holding on to delinquent receivables for too long will cost your company money.

As a participant at the upcoming CreditScape Fall Summit, September 17-18 at the Tropicana in Las Vegas, I will address this topic in much more detail. For more information about the conference, visit www.creditscapeconference.com. I hope to see you there.

Sam Fensterstock is senior VP of Business Development for AG Adjustments. He will be participating in a panel discussion on Collections Compliance and Best Practices at the upcoming CreditScape Fall Summit, and can be reached at samf@agaltd.com.

One of the most frequently asked questions AGA gets from our clients is “how do we capitalize on our ability to collect from our customers?” Our answer is always the same: to be successful in maximizing your cash flow and reducing write-offs you must have three critical policies in place:

1. A Defined Credit Policy – While most companies have defined policies for best practices when it comes to employment, security and many other facets of their business, many companies we speak to do not have a clear policy when it comes to granting and reviewing credit . If you want to get paid after you have delivered your goods or services, you need to made good credit decisions when you decide to engage your customer. If you have not, your chances of collecting, if there is a problem in the future will decrease significantly. What your credit policy should be? Well, that is something that is hard to answer because it needs to be industry and company specific. However, best practices say it should be based on factors such as company risk tolerance, industry standards, gross profit margins and your internal risk assessment capabilities. The bottom line, a good credit policy will help you minimize your risk while maximizing your profitability. The acquisition of all pertinent information about a company such as a fully executed credit application (with verbiage that allows you to add interest and collection fees), financial statements, industry credit reports, trade data as well as a personal guarantee with home address and cell phone information should be a rule of thumb to most credit grantors.

2. A Defined Collection Policy – Just like with your credit policy, your collection policy should be specifically defined, documented and if possible, best practices recommends the use of an order to cash technology solution to help automate part of the collection process. No matter how your credit & collection department is set up, a pre-determined collection strategy that triggers a set of calls and e-mails with specific grace periods based on promises to pay should be deployed. To maximize collection results, the ratio of customers to collectors must also be taken into consideration, given your technology environment. If you’re in a fully automated collections environment you may be able to do more with less, compared to a manual collection process where you may need more collectors to handle the same amount of customers. As we all know, the sale is not complete until the money is in the bank and a defined collection policy will help ensure that your DSO and write offs are in line with company expectations and industry standards.

3. Having Defined Collection Placement Policy and a Strategic Collection Outsourcing Partner – No matter what kind of credit and collection policies you have in place and even if you have state of the art order to cash technology solution deployed, at some point, some customer will ignore all of your all internal collection efforts and not pay you. This is when we believe you should engage with an outside 3rd party collection outsourcing provider. Determining the “point of no return” with your customers is critical. Your collection placement policy should be specifically defined, as it has a direct correlation to your collection outsourcing partner’s ability to successfully recover what you’re owed. Remember, the older a receivable gets the harder it is to collect, so if you want to maximize cash flow from your aged receivables, you don’t need to “beat your customer to death”, just place them in a timely manner and let your partner do their work and you will see more cash come through the door. A proactive and professional approach will also assist in the possible re-acquisition of your customer.

Also, when choosing a collection outsource partner there are several things you should consider such as;
• Is the agency certified by the International Association of Commercial Collectors?
• Is the agency certified by the Commercial Law League of America?
• Does the agency have appropriate bond and liability coverage?
• Does the agency have web based reporting tools that provide you recovery analytics and 100% visibility into their collection efforts?
• Does the agency have the technology capabilities to integrate with your order to cash platform for automated placements?
• Does the agency provide a competitive rate for their services?
• Does the agency have a good reputation in the market?
• How many years has the agency been in business?
• Can the agency provide multiple references of companies who have been customers for more than 5 years?

Choosing the right outsourcing partner is critical in helping maximize the recovery of lost funds. Why is this so? It’s simple, if your company is earning a net profit of 5% and you write off $25,000 you will need and additional $500,000 in sales to offset the loss. In the long run, the success of your collection outsourcing partner can have a tremendous impact on your bottom line.

Sam Fensterstock is Senior Vice President, Business Development, for AGA, a leading commercial collection agency based in Melville, NY. He can be reached at (631) 425-8800 or samf@agaltd.com.